The maker of low-carb, highly processed Atkins-branded foods just made a $1 billion bet on a South Bay-based protein bar company started nearly a decade ago by three technology industry veterans.
Colorado-based Simply Good Foods Co. picked up El Segundo-based Quest Nutrition in an acquisition announced Aug. 21. The all-cash deal is slated to close by the end of the year.
The union would marry two diet crazes — the protein diet fad currently popular with fitness buffs and the Atkins diet, which was developed in the 1960s by cardiologist Robert Atkins and counts actor Rob Lowe as a spokesman.
If completed, the move would diversify Good Foods’ lineup, which is heavily dependent on an out-of-fashion diet fad, and provide the Colorado-based food company with access to Quest’s more robust ecommerce strategy.
It would also turn Good Foods — which today makes frozen meals, shakes, crackers and snacks — into a much larger player in the nutritional snack bar subcategory, which is a $3.3 billion market in the United States, according to market research firm IRI.
“This combination delivers on our strategy to become a broader nutritional snacking company that offers consumers a broad range of brands and products that satisfy their nutritional needs,” Joseph Scalzo, Good Foods’ chief executive, said in announcing the purchase.
With a line of ready-to-eat protein bars, cookies, pizzas and chips, Quest generates about $345 million in sales annually.
A quest for meaning
Quest was founded in 2010 by Tom Bilyeu, Ron Penna and Mike Osborn after they sold their data loss prevention company Awareness Technologies.
The three partners, who also happened to be fitness buffs, were itching for a meaningful new business venture. Penna’s wife had been baking hand-rolled snacks in her kitchen and bringing them to their software company. Even non-gym rats liked the bars. The three knew they were onto something, so they bankrolled the company and promoted it heavily on social media.
By 2014, Quest placed second on Inc. magazine’s list of fastest growing companies, reportedly growing at a clip of 57,000%. The following year, private equity firm VMG Partners bought a minority stake in the company. At the time, Quest was valued at $900 million. Bilyeu left Quest in 2016 to start Impact Theory, which produces self-help videos and provides coaching, classes and other content.
In 2017, Quest underwent restructuring and laid off 524 workers at manufacturing plants in the City of Industry and Walnut. The company also shifted its production and distribution to third parties — similar to the strategy employed by Good Foods.
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